Being a first time home buyer can be very exciting. You get to go out in search of that perfect home, the dream combination of both a residence and an investment in your future. It will likely be the most expensive purchase you make in your whole life, and you want to make sure you do everything right. It's a good idea to enlist the best real estate services in Mississauga to help you out so you get a good idea of what's on the market.
The biggest limiting factor you will come across in your search for a new home is your mortgage. Pretty much without exception, every home owner purchases their home through money forwarded to them in a mortgage. Whether we are talking London On townhomes or Regina farmsteads, properties purchased through money loaned to the owner from a lending institution.
Getting a mortgage can be a daunting task, particularly in today's expensive housing market. Here on Property House, we like to make sure our readers are prepared for all aspects of the real estate experience. Let's take a look at a few things you need to know about securing a loan for your house purchase.
Timing
You need to apply for a mortgage as soon as you start thinking about buying a home of your own. Don't wait until you find the right house, for a couple of different reasons.
The first reason is that knowing how much you qualify for as far as a loan will be a great guide for your house search. You will know how much you can afford to spend, and that will mean you can limit the houses you look at to a certain price range. You don't want to waste your time and your realtor's looking at houses you can't possible afford, be they from ReMax or Sutton. Mortgage pre-approval will help you with the short list.
Having pre-approval will also mean that when it comes time to buy your house, you will be able to offer the seller money right away. This can make a big difference if you are bidding against another potential buyer.
The Process
All mortgages are not created equally, so before you apply with any one mortgage broker you should research a few different ones. The main difference you are looking for is in the interest on the mortgage rate. Toronto brokers may differ by only a fraction of a percentage point, but this difference is significant over the life of your mortgage. The inflated real estate prices today mean that large mortgages are common, and higher interest means a lot more money actually spent on your house purchase.
Once you do find a broker that offers a rate you find competitive, you have to decide whether you want a fixed or floating rate. Fixed rate means that your mortgage will be charged at the same interest rate for a certain amount of time, usually five years. Floating rates mean the interest is directly tied to the economy, and may rise or fall according to conditions.
Now that you have made your mortgage decisions, the broker will make theirs. There are three main factors your broker will look at.
The first is your credit history. Most brokers want to see as little debt as possible, with no delinquent payments or defaults. Any black spots will mean you qualify for less money, or no mortgage at all. They will also have a look at your verified income.
You can also expect to have your debt to income ratio analyzed. Your broker will want to see that you make enough money each month to cover your current debts as well as the payments you must make on their loan.
Finally, your broker will want to take a look at the value of the house you eventually purchase. If they feel the home is worth the price, your mortgage loan will begin to be processed.
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